Cash purchase of car, or PCP. Help needed

Hungerdunger

I'm in the fortunate position of being able to buy a new car with cash from my savings.  However when I discussed this with the salesman yesterday he was trying to persuade me that it would be a no-brainer to take out PCP, and even if I cancelled after taking it out I would still be quids in.

I have attached the quotation he gave me.  Now the cash price would be £22630 after part-exchange.  As I understand it, if I take out the PCP, over the three years I will pay £9,948 (36 x £276.35) in instalments and at the end I'll have to pay the GMFV of £17,157 (assuming I want to keep the car), giving a total of £27,106. Assuming I keep my £22630 cash in the bank earning around 1%, this will only earn me around £500, so it still appears that the PCP will be more expensive.  He also said I could cancel the PCP at any time, but again my understanding is that I'd still have to pay any outstanding payments plus the GMFV.

I'm a bit of a numptie at this sort of thing, so maybe I'm missing something.  I'd be grateful if someone could explain what it is.

ian16527

You will get the finance deposit contribution taking the PCP , then go that way then pay off the PCP as soon as they will let you, within the first month if possible. You may be charged a small paying off fee. You can pay a PCP of anytime, just ask for a settlement figure, but the longer you leave it the more it will cost in interest

ElefantEd

Borrowing money is always more expensive than using savings*. I don't think you are missing anything, thePCP isn't a good deal.

* nearly always anyway.

couriervanman

Because they make more commission/profit etc on PCP

ian16527

Do you get the £3k deposit contribution on a non PCP deal?

marlot

Do a search on this forum.  Many (including me) have bought new cars taking advantage of the manufacturers contribution.  And then settled the finance within 14 days.
The manufacturers have inflated the RRP of the cars over the last few years, but give discounts to make people think they're getting a good deal.  Cash is rarely cheapest at the moment.

Grumpy_chap

In working out the deposit, there is a mix of positive and negative entries.
Is the dealer giving you £4k cashback (from your trade in), or are you paying £4k deposit plus the trade in?

macman

It's the salesman who will be 'quids in', because the dealer will get the commission on the finance deal. Don't ever think that a salesman is neutral when it comes to finance: decide for yourself what the best deal is.

neilmcl

@Hungerdunger, you are missing something. They are offering a decent contribution to take their finance. The trick is to take the PCP deals then cancel within 14 days, as is your right, pay off the the car and benefit from the contributions.

Also something about the figures, particularly the negative deposit doesn't look quite correct.

molerat

Are they really going to give you £4K in cash ?

daveyjp

This is why I avoid PCPs.  Too many figures in too many boxes and not set out with any logic,  all designed to confuse.

The trade in value is £10,750, cost to change is therefore £22,630, the 'maths magic' of contribution and negative deposit increases this to £23,630, and deposit becomes £9,750..? £1,000 increase just like that.

There is also no APR quoted.

Find a used model, save £10k and pay in cash.